3/19/2020 G.R. No. 197526/G.R. No.

199676-77

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SECOND DIVISION

July 26, 2017

G.R. No. 197526

CE LUZON GEOTHERMAL POWER COMPANY, INC., Petitioner

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent

x-----------------------x

G.R. No. 199676-77

REPUBLIC OF THE PHILIPPINES, represented by the BUREAU OF INTERNAL REVENUE, Petitioner,

vs.
CE LUZON GEOTHERMAL POWER COMPANY, INC., Respondent.

DECISION

LEONEN, J.:

The 120-day and 30-day reglementary periods under Section 112(C) of the National Internal Revenue Code are
both mandatory and jurisdictional. Non-compliance with these periods renders a judicial claim for refund of
creditable input tax premature.

Before this Court are two (2) consolidated Petitions for Review concerning the prescriptive period in filing judicial
claims for unutilized creditable input tax or input Value Added Tax (VAT).

The first Petition,1 docketed as G.R. No. 197526, was filed by CE Luzon Geothermal Power Company, Inc. (CE
Luzon) against the Commissioner of Internal Revenue. The second Petition,2 docketed as G.R. Nos. 199676-77,
was instituted by the Bureau of Internal Revenue, on behalf of the Republic of the Philippines, against CE Luzon.

CE Luzon is a domestic corporation engaged in the energy industry.3 It owns and operates the CE Luzon
Geothermal Power Plant, which generates power for sale to the Philippine National Oil Company-Energy
Development Corporation by virtue of an energy conversion agreement.4 CE Luzon is a VAT-registered taxpayer
with Tax Identification Number 003- 924-356-000.5

The sale of generated power by generation companies is a zero-rated transaction under Section 6 of Republic Act
No. 9136.6

In the course of its operations, CE Luzon incurred unutilized creditable input tax amounting to ₱26,574,388.99 for
taxable year 2003.7 This amount was duly reflected in its amended quarterly VAT returns.8 CE Luzon then filed
before the Bureau of Internal Revenue an administrative claim for refund of its unutilized creditable input tax as
follows:

Unutilized
Quarter Date of Piling Creditable Input
Tax

1st January 20, 2005 [₱]4, 785,234. 70

2nd March 31, 2005 [₱]4,568,458.49

3rd June 7, 2005 [₱]7,455,413.97

4th June 7, 2005 [₱]9, 765,281.83

Total [₱]26,574,388.999

Without waiting for the Commissioner of Internal Revenue to act on its claim, or for the expiration of 120 days, CE
Luzon instituted before the Court of Tax Appeals a judicial claim for refund of its first quarter unutilized creditable
input tax on March 30, 2005.10 The petition was docketed as CTA Case No. 7180.11

Meanwhile, on June 24, 2005, CE Luzon received the Commissioner of Internal Revenue's decision denying its
claim for refund of creditable input tax for the second quarter of 2003.12

On June 30, 2005, CE Luzon filed before the Court of Tax Appeals a judicial claim for refund of unutilized creditable
input tax for the second to fourth quarters of taxable year 2003.13 The petition was docketed as CTA Case No.
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14
7279.

The material dates are summarized below:

Period of
Date of Filing Date of Receipt of Date of Filing of
Claim Taxable Expiration of 120 days
Administrative Claim Denial of Claim Petition for Review
Year 2003

1st quarter January 20, 2005 May 20, 2005 - March 30, 2005

2nd quarter May 31, 2005 - June 24, 2005 June 30, 2005

3rd quarter June 7, 2005 October 5, 2005 - June 30, 2005

4th quarter June 7, 2005 October 5, 2005 - June 30, 200515

In his Answer,16 the Commissioner of Internal Revenue asserted, among others, that CE Luzon failed to comply with
the invoicing requirements under the law.17

In the Decision18 dated April 21, 2009, the Court of Tax Appeals Second Division partially granted CE Luzon's claim
for unutilized creditable input tax. It ruled that both the administrative and judicial claims of CE Luzon were brought
within the two (2)-year prescriptive period.19 However, the Court of Tax Appeals Second Division disallowed the
amount of ₱3,084,874.35 to be refunded.20 CE Luzon was only able to substantiate ₱22,647,638.47 of its claim.21
The Court of Tax Appeals Second Division ordered the Commissioner of Internal Revenue to issue a tax credit
certificate or to refund CE Luzon the amount of ₱22,647,638.47 representing CE Luzon's creditable input tax for
taxable year 2003.22

CE Luzon and the Commissioner of Internal Revenue both moved for reconsideration.23 In the Resolution24 dated
October 19, 2009, the Court of Tax Appeals Second Division denied both motions for lack of merit.

CE Luzon and the Commissioner of Internal Revenue then filed their respective Petitions for Review before the
Court of Tax Appeals En Banc. The Petitions were docketed as C.T.A. EB No. 553 and C.T.A. EB No. 554,
respectively.25

In the Decision26 dated July 20, 2010, the Court of Tax Appeals En Banc partially granted CE Luzon's Petition for
Review.27 The Court of Tax Appeals En Banc ordered the Commissioner of Internal Revenue to issue a tax credit
certificate or to refund CE Luzon the amount of ₱23,489,514.64, representing CE Luzon's duly substantiated
creditable input tax for taxable year 2003.28

However, on November 22, 2010, the Court of Tax Appeals En Banc rendered an Amended Decision,29 setting aside
its Decision dated July 20, 2010.30 The Court of Tax Appeals En Banc ruled that CE Luzon failed to observe the 120-
day period under Section 112(C) of the National Internal Revenue Code. Hence, it was barred from claiming a
refund of its input VAT for taxable year 2003.31 The Court of Tax Appeals En Banc held that CE Luzon's judicial
claims were prematurely filed.32 CE Luzon should have waited either for the Commissioner of Internal Revenue to
render a decision or for the 120-day period to expire before instituting its judicial claim for refund:33

WHEREFORE, premises considered:

1) the Commissioner of Internal Revenue's "Motion for Reconsideration" is hereby GRANTED.

Accordingly, our Decision dated July 20, 2010 in the above[-]captioned case is hereby RECALLED and
SET ASIDE, and a new one is hereby entered DISMISSING CE Luzon's Petition for Review in C.T.A.
EB No. 553 and GRANTING CIR's Petition for Review in C.T.A. EB No. 554. Accordingly, the Decision
dated April 21, 2009 and Resolution dated October 19, 2009 rendered by the Former Second Division
in C.T.A. CASE Nos. 7180 and 7279 are hereby REVERSED and SET ASIDE.

2) For being moot and academic, CE LUZON's "Motion for Partial Reconsideration" is hereby DENIED.

SO ORDERED.34

CE Luzon moved for partial reconsideration.35 On June 27, 2011, the Court of Tax Appeals En Banc rendered a
second Amended Decision,36 partially granting CE Luzon's claim for unutilized creditable input tax but only for the
second quarter of taxable year 2003 and only up to the extent of ₱3,764,386.47.37 The Court of Tax Appeals En
Banc relied on Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc.38 in partially granting the
petition.

The Court of Tax Appeals En Banc found that CE Luzon's judicial claim for refund of input tax for the second quarter
of 2003 was timely filed.39 However, the Court of Tax Appeals En Banc disallowed ₱804,072.02 to be refunded
because of CE Luzon's non-compliance with the documentation and invoicing requirements:40

WHEREFORE, premises considered, CE Luzon Geothermal Power Company, Inc.'s "Motion for
Reconsideration" is PARTLY GRANTED. Accordingly, our Amended Decision dated November 22,
2010 only in so far as it dismissed CE Luzon Geothermal Power Company, Inc.'s 2nd quarter claim, is
hereby LIFTED and SET ASIDE, and another one is hereby entered ordering the Commissioner of
Internal Revenue to REFUND or to ISSUE A TAX CREDIT CERTIFICATE in favor of CE Luzon
Geothermal Power, Inc. in the reduced amount of THREE MILLION SEVEN HUNDRED SIXTY FOUR
THOUSAND THREE HUNDRED EIGHTY SIX AND 471100 PESOS (P3,764,386.47), representing its
unutilized input VAT for the second quarter of taxable year 2003.

SO ORDERED.41

On September 2, 2011, CE Luzon filed before this Court a Petition for Review on Certiorari42 challenging the second
Amended Decision dated June 27, 2011 of the Court of Tax Appeals En Banc.43 The Petition was docketed as G.R.
No. 197526.44

On January 27, 2012, the Commissioner of Internal Revenue filed a Petition for Review on Certiorari45 assailing the
second Amended Decision dated June 27, 2011 and the Resolution dated December 1, 2011 of the Court of Tax

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Appeals En Banc insofar as it granted CE Luzon's second quarter claim for refund.47 The Petition was docketed as
46

G.R. Nos. 199676-77.48

The Commissioner of Internal Revenue filed a Comment on the Petition for Review49 in G.R. No. 197526 on
February 7, 2012.

On April 11, 2012, the Petitions were consolidated.50

In the Resolution dated August 1, 2012, CE Luzon was required to file a comment on the Petition in G.R. Nos.
199676-77 and a reply to the comment in G.R. No. 197526.51

On November 14, 2012, CE Luzon filed its Comment on the Petition in G.R. Nos. 199676-7752 and its Reply to the
comment on the Petition in G.R. No. 197526.53

In the Resolution54 dated June 26, 2013, this Court gave due course to the petitions and required the parties to
submit their respective memoranda. Meanwhile, on July 19, 2013, CE Luzon filed a Supplement to its Petition.55

The Commissioner of Internal Revenue filed his Memorandum56 on September 16, 2013 while CE Luzon filed its
Memorandum57 on September 20, 2013.

In its Petition docketed as G.R. No. 197526, CE Luzon asserts that its judicial claims for refund of input VAT
attributable to its zero-rated sales were timely filed.58 Relying on Atlas Consolidated Mining and Development
Corporation v. Commissioner of Internal Revenue,59 CE Luzon argues that the two (2)-year prescriptive period under
Section 229 of the National Internal Revenue Code60 governs both the administrative and judicial claims for refund
of creditable input tax.61 CE Luzon contends that creditable input tax attributable to zero-rated sales is excessively
collected tax.62

CE Luzon asserts that since the prescriptive periods in Section 112(C) of the National Internal Revenue Code are
merely permissive, it should yield to Section 229.63 Moreover, Section 112(C) does not state that a taxpayer is
barred from filing a judicial claim for non-compliance with the 120-day period.64

CE Luzon emphasizes that the doctrine in Atlas directly addressed the correlation between Section 229 and Section
112(C) of the National Internal Revenue Code. Atlas stated that a taxpayer seeking a refund of input VAT may
invoke Section 229 because input VAT was an "erroneously collected national internal revenue tax."65 CE Luzon
points out that Aichi never established a binding rule regarding the prescriptive periods in filing claims for refund of
creditable input tax.66

Assuming that Aichi correctly interpreted Section 112(C) of the National Internal Revenue Code, CE Luzon states
that it should not be applied in this case because CE Luzon's claims for refund were filed before Aichi's
promulgation.67 The prevailing rule at the time when CE Luzon instituted its judicial claim for refund was that both
the administrative and judicial claims should be filed within two (2) years from the date the tax is paid.68

In any case, CE Luzon argues that the Commissioner of Internal Revenue is estopped from assailing the timeliness
of its judicial claims.69 The Commissioner of Internal Revenue categorically stated in several of its rulings that
taxpayers need not wait for the expiration of 120 days before instituting a judicial claim for refund of creditable input
tax.70 CE Luzon relies on the following Bureau of Internal Revenue issuances: (1) Section 4.104-2, Revenue
Regulations No. 7-95; (2) Revenue Memorandum Circular No. 42-99; (3) Revenue Memorandum Circular No. 42-
2003, as amended by Revenue Memorandum Circular No. 49-2003; (4) Revenue Memorandum Circular No. 29-
2009; and (5) Bureau of Internal Revenue Ruling DA-489- 03.71

On the other hand, the Commissioner of Internal Revenue argues that Sections 112(C) and 229 of the National
Internal Revenue Code need not be harmonized because they are clear and explicit.72 Laws should only be
construed if they are "ambiguous or doubtful in meaning."73 Section 112(C) clearly provides that in claims for refund
of creditable input tax, taxpayers can only elevate their judicial claim upon receipt of the decision denying their
administrative claim or upon the lapse of 120 days.74 Moreover, the tax covered in Section 112 is different from the
tax in Section 229. Section 112(C) covers unutilized input tax. In contrast, Section 229 pertains to national internal
revenue tax that is erroneously or illegally collected.75

The Commissioner of Internal Revenue further contends that CE Luzon's reliance on Atlas is misplaced.76 Atlas
neither directly nor indirectly raised the issue of prescriptive periods in filing claims for refund of input VAT. In
addition, Atlas was decided under the old tax code.77 The clear and categorical precedent regarding the issue of
prescriptive periods in refunds of input VAT is Aichi.78

Although the Bureau of Internal Revenue has ruled that judicial claims for refund of input VAT may be brought within
the two (2)-year period under Section 229, the Commissioner of Internal Revenue asserts that the State cannot be
estopped by the errors or mistakes of its agents.79 An erroneous construction does not create a vested right on
those who have relied on it. Taxpayers can neither prevent the correction of the erroneous interpretation nor excuse
themselves from compliance.80

In the Petition docketed as G.R. No. 199676-77, the Commissioner of Internal Revenue assails the June 27, 2011
Amended Decision and December 1, 2011 Resolution of the Court of Tax Appeals En Banc insofar as it granted CE
Luzon's second quarter claim for refund of VAT for taxable year 2003.81

According to the Commissioner of Internal Revenue, taxpayers should comply with the provisions of Sections 236,
ll0(A), 113, and 114 of the National Internal Revenue Code when claiming a refund of unutilizedcreditable input tax.
They should also meet the requirements enumerated under the relevant Bureau of Internal Revenue regulations.
Moreover, it must be proven that the input tax being claimed is attributable to zero-rated sales.82 The Commissioner
of Internal Revenue asserts that CE Luzon failed to comply with these requirements.83

On the other hand, CE Luzon argues that the Commissioner of Internal Revenue is estopped from questioning CE
Luzon's non-compliance with the documentation requirements under the law. It points out that its administrative
claim for input VAT for the second quarter of taxable year 2003 was denied by the Commissioner of Internal
Revenue based on the finding that CE Luzon presumptively opted to carry over its excess input tax to the
succeeding taxable quarters.84

CE Luzon further contends that non-submission of complete documents is not fatal to a judicial claim for refund of
input tax.85 The Court of Tax Appeals is not bound by the conclusions and findings of the Bureau of Internal

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Revenue.

Finally, CE Luzon asserts that it has proven its entitlement to a refund of input VAT for the second quarter of 2003.87
First, its judicial claim for refund was timely filed.88 Second, its sales were effectively zero-rated transactions under
Republic Act No. 9136.89 Third, although it opted to carry over its excess input tax, its actual claim was deducted
from the total excess input VAT and was not part of what was carried over to the succeeding taxable quarters.90 CE
Luzon adds that the Commissioner of Internal Revenue did not identify which documents it failed to submit.91

This case presents two (2) issues for resolution:

First, whether CE Luzon Geothermal Power, Inc.'s judicial claims for refund of input Value Added Tax for taxable
year 2003 were filed within the prescriptive period;92 and

Finally, whether CE Luzon Geothermal Power, Inc. is entitled to the refund of input Value Added Tax for the second
quarter of taxable year 2003.93 Subsumed in this issue is whether it has substantiated this claim.94

Excess input tax or creditable input tax is not an erroneously, excessively, or illegally collected tax.95 Hence, it is
Section 112(C) and not Section 229 of the National Internal Revenue Code that governs claims for refund of
creditable input tax.

The tax credit system allows a VAT-registered entity to "credit against or subtract from the VAT charged on its sales
or outputs the VAT paid on its purchases, inputs and imports."96

The VAT paid by a VAT-registered entity on its imports and purchases of goods and services from another VAT-
registered entity refers to input tax.97 On the other hand, output tax refers to the VAT due on the sale of goods,
properties, or services of a VAT-registered person.98

Ordinarily, VAT-registered entities are liable to pay excess output tax if their input tax is less than their output tax at
any given taxable quarter. However, if the input tax is greater than the output tax, VAT-registered persons can carry
over the excess input tax to the succeeding taxable quarter or quarters.99

Nevertheless, if the excess input tax is attributable to zero-rated or effectively zero-rated transactions, the excess
input tax can only be refunded to the taxpayer or credited against the taxpayer's other national internal revenue tax.
Availing any of the two (2) options entail compliance with the procedure outlined in Section 112,100 not under Section
229, of the National Internal Revenue Code.

Section 229 of the National Internal Revenue Code, in relation to Section 204(C), pertains to the recovery of
excessively, erroneously, or illegally collected national internal revenue tax. Sections 204(C) and 229 provide:

Section 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The
Commissioner may -

....

(C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority,
refund the value of internal revenue stamps when they are returned in good condition by the purchaser,
and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and
refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed
unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2)
years after the payment of the tax or penalty: Provided, however, That a return filed showing an
overpayment shall be considered as a written claim for credit or refund.

....

Section 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be
maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have
been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected
without authority, or of any sum alleged to have been excessively or in any manner wrongfully
collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or
proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest
or duress.

In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date
of payment of the tax or penalty regardless of any supervening cause that may arise after payment:
Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit
any tax, where on the face of the return upon which payment was made, such payment appears clearly
to have been erroneously paid.

The procedure outlined above provides that a claim for refund of excessively or erroneously collected taxes should
be made within two (2) years from the date the taxes are paid. Both the administrative and judicialclaims should be
brought within the two (2)-year prescriptive period. Otherwise, they shall forever be barred.101 However, Section 229
presupposes that the taxes sought to be refunded were wrongfully paid.102

It is unnecessary to construe and harmonize Sections 112(C) and 229 of the National Internal Revenue Code.
Excess input tax or creditable input tax is not an excessively, erroneously, or illegally collected tax because the
taxpayer pays the proper amount of input tax at the time it is collected.103 That a VAT-registered taxpayer incurs
excess input tax does not mean that it was wrongfully or erroneously paid. It simply means that the input tax is
greater than the output tax, entitling the taxpayer to carry over the excess input tax to the succeeding taxable
quarters.104 If the excess input tax is derived from zero-rated or effectively zero-rated transactions, the taxpayer may
either seek a refund of the excess or apply the excess against its other internal revenue tax.105

The distinction between "excess input tax" and "excessively collected taxes" can be understood further by
examining the production process vis-a-vis the VAT system. In Commissioner of Internal Revenue v. San Roque:106

The input VAT is not "excessively" collected as understood under Section 229 because at the time the
input VAT is collected the amount paid is correct and proper. The input VAT is a tax liability of, and
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legally paid by, a VAT-registered seller of goods, properties or services used as input by another VAT-
registered person in the sale of his own goods, properties, or services. This tax liability is true even if
the seller passes on the input VAT to the buyer as part of the purchase price. The second VAT-
registered person, who is not legally liable for the input VAT, is the one who applies the input VAT as
credit for his own output VAT. If the input VAT is in fact "excessively" collected as understood under
Section 229, then it is the first VAT-registered person - the taxpayer who is legally liable and who is
deemed to have legally paid for the input VAT - who can ask for a tax refund or credit under Section
229 as an ordinary refund or credit outside of the VAT System. In such event, the second VAT-
registered taxpayer will have no input VAT to offset against his own output VAT.

In a claim for refund or credit of "excess" input VAT under Section 110 (B) and Section 112 (A), the
input VAT is not "excessively" collected as understood under Section 229. At the time of payment of the
input VAT the amount paid is the correct and proper amount. Under the VAT System, there is no claim
or issue that the input VAT is "excessively" collected, that is, that the input VAT paid is more than what
is legally due. The person legally liable for the input VAT cannot claim that he overpaid the input VAT by
the mere existence of an "excess" input VAT. The term "excess" input VAT simply means that the input
VAT available as credit exceeds the output VAT, not that the input VAT is excessively collected because
it is more than what is legally due. Thus, the taxpayer who legally paid the input VAT cannot claim for
refund or credit of the input VAT as "excessively" collected under Section 229.107 (Citations omitted,
emphasis supplied)

Considering that creditable input tax is not an excessively, erroneously, or illegally collected tax, Section 112(A) and
(C) of the National Internal Revenue Code govern:

Section 112. Refunds or Tax Credits of Input Tax. -

(A) Zero-rated or Effectively Zero-rated Sales. - Any VAT-registered person, whose sales are zero-rated
or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales
were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid
attributable to such sales, except transitional input tax, to the extent that such input tax has not been
applied against output tax: Provided, however, That in the case of zero-rated sales under Section
106(A)(2)(a)(l), (2) and (B) and Section 108 (B)(l) and (2), the acceptable foreign currency exchange
proceeds thereof had been duly accounted for in accordance with the rules and regulations of the
Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated
or effectively zero-rated sale and also in taxable or exempt sale of goods or properties or services, and
the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of
the transactions, it shall be allocated proportionately on the basis of the volume of sales ...

....

(C) Period within which Refund or Tax Credit of Input Taxes shall be Made. - In proper cases, the
Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one
hundred twenty (120) days from the date of submission of complete documents in support of the
application filed in accordance with Subsection (A) hereof.

In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the
Commissioner to act on the application within the period prescribed above, the taxpayer affected may,
within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the
one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax
Appeals.

Section l 12(C) of the National Internal Revenue Code provides two (2) possible scenarios.108 The first is when the
Commissioner of Internal Revenue denies the administrative claim for refund within 120 days.109 The second is
when the Commissioner of Internal Revenue fails to act within 120 days.110 Taxpayers must await either for the
decision of the Commissioner of Internal Revenue or for the lapse of 120 days before filing their judicial claims with
the Court of Tax Appeals.111 Failure to observe the 120-day period renders the judicial claim premature.112

CE Luzon's reliance on Atlas is misplaced because Atlas did not squarely address the issue regarding the
prescriptive period in filing judicial claims for refund of creditable input tax.113 Atlas did not expressly or impliedly
interpret Section 112(C) of the National Internal Revenue Code.114 The main issue in Atlas was the reckoning point
of the two (2)-year prescriptive period stated in Section 112(A).115 The interpretation in Atlas was later rectified in
Commissioner of Internal Revenue v. Mirant Pagbilao Corporation.116

It was Aichi117 that directly tackled and interpreted Section 112(C) of the National Internal Revenue Code. In
determining whether Aichi's judicial claim for refund of creditable input tax was timely filed, this Court declared:

Section 112 (D) of the NIRC clearly provides that the CIR has "120 days, from the date of the
submission of the complete documents in support of the application [for tax refund/credit]," within which
to grant or deny the claim. In case of full or partial denial by the CIR, the taxpayer's recourse is to file
an appeal before the CTA within 30 days from receipt of the decision of the CIR. However, if after the
120-day period the CIR fails to act on the application for tax refund/credit, the remedy of the taxpayer is
to appeal the inaction of the CIR to CTA within 30 days.

....

Respondent's assertion that the non-observance of the 120-day period is not fatal to the filing of a
judicial claim as long as both the administrative and the judicial claims are filed within the two-year
prescriptive period has no legal basis.

There is nothing in Section 112 of the NIRC to support respondent's view. Subsection (A) of the said
provision states that "any VAT-registered person, whose sales are zero-rated or effectively zero-rated
may, within two years after the close of the taxable quarter when the sales were made, apply for the
issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such
sales." The phrase "within two (2) years ... apply for the issuance of a tax credit certificate or refund"
refers to applications for refund/credit filed with the CIR and not to appeals made to the CTA. This is
apparent in the first paragraph of subsection (D) of the same provision, which states that the CIR has

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"120 days from the submission of complete documents in support of the application filed in accordance
with Subsections (A) and (B)" within which to decide on the claim.118

The Aichi doctrine was reiterated by this Court in San Roque,119 which held that the 120-day and 30-day periods in
Section 112(C) of the National Internal Revenue Code are both mandatory and jurisdictional.120

In the present case, only CE Luzon's second quarter claim was filed on time. Its claims for refund of creditable input
tax for the first, third, and fourth quarters of taxable year 2003 were filed prematurely. It did not wait for the
Commissioner of Internal Revenue to render a decision or for the 120-day period to lapse before elevating its
judicial claim with the Court of Tax Appeals.

However, despite its non-compliance with Section 112(C) of the National Internal Revenue Code, CE Luzon's
judicial claims are shielded from the vice of prematurity. It relied on the Bureau of Internal Revenue Ruling DA-489-
1âwphi1

03,121 which expressly states that "a taxpayer-claimant need not wait for the lapse of the 120-day period before it
could seek judicial relief with the [Court of Tax Appeals] by way of a Petition for Review."122

San Roque exempted taxpayers who had relied on the Bureau of Internal Revenue Ruling DA-489-03 from the strict
application of Section 112(C) of the National Internal Revenue Code.123 This Court characterized the Bureau of
Internal Revenue Ruling DA-489-03 as a general interpretative rule,124 which has "misle[d] all taxpayers into filing
prematurely judicial claims with the C[ourt] [of] T[ax] A[ppeals]."125 Although the Bureau of Internal Revenue Ruling
DA-489-03 is an "erroneous interpretation of the law,"126 this Court made an exception explaining that "[t]axpayers
should not be prejudiced by an erroneous interpretation by the Commissioner, particularly on a difficult question of
law."127

Taxpayers who have relied on the Bureau of Internal Revenue Ruling DA-489-03, from its issuance on December
10, 2003 until its reversal on October 6, 2010 by this Court in Aichi, are, therefore, shielded from the vice of
prematurity.128 CE Luzon may claim the benefit of the Bureau of Internal Revenue Ruling DA-489-03. Its judicial
claims for refund of creditable input tax for the first, third, and fourth quarters of 2003 should be considered as timely
filed.

However, the case should be remanded to the Court of Tax Appeals for the proper computation of creditable input
tax to which CE Luzon is entitled.

II

In a Rule 45 Petition, only questions of law may be raised.129 "This Court is not a trier of facts."130 The determination
of whether CE Luzon duly substantiated its claim for refund of creditable input tax for the second quarter of taxable
year 2003 is a factual matter that is generally beyond the scope of a Petition for Review on Certiorari. Unless a case
falls under any of the exceptions, this Court will not undertake a factual review and look into the parties' evidence
and weigh them anew.

In the Petition docketed as G.R. Nos. 199676-77, the Commissioner of Internal Revenue failed to establish that this
case is exempted from the general rule. Hence, this Court will no longer disturb the Court of Tax Appeals' findings
on the matter.

WHEREFORE, the Petition in G.R. No. 197526 is GRANTED while the Petition in G.R. Nos. 199676-77 is DENIED.
The Amended Decision dated June 27, 2011 of the Court of Tax Appeals En Banc in C.T.A. EB NO. 554 is
REVERSED and SET ASIDE. However, the case is REMANDED to the Court of Tax Appeals for the determination
and computation of creditable input tax to which CE Luzon Geothermal Power Company, Inc. is entitled.

SO ORDERED.

MARVIC M.V.F. LEONEN

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

DIOSDADO M. PERALTA JOSE CATRAL MENDOZA

Associate Justice Associate Justice

SAMUEL R. MARTIRES
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned
to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION

Pursuant to the Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that
the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer
of the opinion of the Court’s Division.

MARIA LOURDES P.A. SERENO

Chief Justice

Footnotes
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3/19/2020 G.R. No. 197526/G.R. No. 199676-77
1
Rollo (G.R. No. 197526), pp. 14-90.
2
Rollo (G.R. No. 199676-77), pp. 10-38.
3
Rollo (G.R. No. 197526), p. 21, Petition for Review on Certiorari.
4
Id.
5
Id. at 20.
6
Rollo (G.R. No. 199676-77), p. 15.

Rep. Act No. 9136, sec. 6, par. 5 provides:

Section 6. Generation Sector. -

....

Pursuant to the objective of lowering electricity rates to end-users, sales of generated power by
generation companies shall be value added tax zero-rated.
7
Rollo (G.R. No. 197526), p. 22.
8
Id. at 21-22.
9
Id. at 22.
10
Id. at 217, Comment.
11
Id.
12
Id. at 216.
13
Id. at 217.
14
Id.
15
Id.
16
Id. at 110.
17
Rollo (G.R. No. 199676-77), pp. 17-19.
18
Rollo (G.R. No. 197526) pp. 107-126. The Decision was penned by Associate Justice Erlinda P. Uy and
concurred in by Associate Justices Juanito C. Castañeda, Jr. and Olga Palanca-Enriquez of the Second
Division, Court of Tax Appeals, Quezon City.
19
Id. at 124-125.
20
Id. at 23.
21
Id. at ll9.
22
Id. at 125.
23
Id. at 23.
24
Id.at128-133.
25
Id. at 23-24.
26
Id. at 136-162. The Decision was penned by Associate Justice Olga Palanca-Enriquez and concurred in by
Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Caesar A. Casanova, Esperanza R. Fabon-
Victorino, and Cielito N. Mindaro-Grulla. Presiding Justice Ernesto D. Acosta dissented while Associate
Justices Erlinda P. Uy and Amelia R. Cotangco-Manalastas were on leave.
27
Id. at 160.
28
Id. at 160-161.
29
Id. at 171-179. The Decision was penned by Associate Justice Olga Palanca-Enriquez and concurred in by
Presiding Justice Ernesto D. Acosta, Associate Justices Juanito C. Castaneda, Jr., Erlinda P. Uy, Caesar A.
Casanova, Esperanza R. Pabon-Victorino, Cielito N. Mindaro-Grulla and Amelia R. Cotangco-Manalastas.
Associate Justice Lovell R. Bautista dissented.
30
Id. at 25-26.
31
Id. at173-174.
32
Id. at 176.
33
Id.
34
Id. at 178-179.
35
Id. at 26.
36
Id. at 91-105. The Decision was penned by Associate Justice Olga Palanca-Enriquez and concurred in by
Presiding Justice Ernesto D. Acosta, Associate Justices Juanito C. Castañeda, Jr., Erlinda P. Uy, Caesar A.

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Casanova, Esperanza R. Pabon-Victorino, Cielito N. Mindaro-Grulla, and Amelia R. Cotangco-Manalastas.

Associate Justice Lovell R. Bautista dissented.
37
Id. at 104.
38
Id. at 95. 646 Phil. 710 (2010) [Per J. Del Castillo, First Division].
39
Id. at 101.
40
Id. at 101-103.
41
Id. at 104.
42
Id. at 14-90.
43
Id. at 27.
44
Id. at 14.
45
Rollo (G.R. No. 199676-77), pp. 10-38.
46
Id. at 11.
47
Id. at 33.
48
Id. at 10.
49
Rollo (G.R. No. 197526), 214-242.
50
Rollo (G.R. No. 199676-77), 343-344.
51
Id. at 345.
52
Id. at 358-375.
53
Rollo (G.R. No. 197526), pp. 269-308.
54
Id. at 323-323-A.
55
Id. at 328-339.
56
Id. at 344-366.
57
Id. at 368-405.
58
Id. at 28.
59
551 Phil. 519 (2007) [Per J. Chico-Nazario, Third Division].
60
TAX CODE, sec. 229 provides:

Section 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be
maintained in any court for the recovery of any national internal revenue tax hereafter alleged to
have been erroneously or illegally assessed or collected, or of any penalty claimed to have been
collected without authority, or of any sum alleged to have been excessively or in any manner
wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner;
but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has
been paid under protest or duress.

In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from
the date of payment of the tax or penalty regardless of any supervening cause that may arise
after payment: Provided, however, That the Commissioner may, even without a written claim
therefor, refund or credit any tax, where on the face of the return upon which payment was
made, such payment appears clearly to have been erroneously paid.
61
Rollo (G.R. No. 197526), p. 28.
62
Id. at 39--42.
63
Id. at 43--45.
64
Id. at 45.
65
Id. at 53.
66
Rollo (G.R. No. 197526), p. 50.
67
Id. at 301-303.
68
Id.at39.
69
Id. at 66.
70
Id.
71
Id. at 66-67.
72
Id. at 225-231. The Commissioner meant Section 112(C) in her Comment which mentioned Section 112 (D)
instead.

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3/19/2020 G.R. No. 197526/G.R. No. 199676-77
73
Id. at 227.
74
Id. at 229.
75
Id.
76
Id. at 234-235.
77
Id. at 236.
78
Id. at 237.
79
Id.at231-232.
80
Id. at 232.
81
Rollo(G.R.No.199676-77),p. ll.
82
Id. at 28-29.
83
Id. at 30.
84
Id. at 363-364.
85
Id. at 365-367.
86
Id. at 369.
87
Id. at 370.
88
Id.
89
Id. at 371.
90
Id.
91
Id.
92
Rollo (G.R. No. 197526), p. 28.
93
Rollo (G.R. No. 199676-77) p. 25.
94
Id.
95
Commissioner of Internal Revenue v. San Roque Power Corp., 703 Phil. 310, 365 (2013) [Per J. Carpio, En
Banc].
96
Commissioner of Internal Revenue v. Seagate Technology (Philippines), 491 Phil. 317, 332 (2005) [Per J.
Panganiban, Third Division].
97
TAX CODE, sec. l 10(A)(3) provides:

Section 110. Tax Credits. -

(A) Creditable Input Tax. -

(3) ....

The term "input tax" means the value-added tax due from or paid by a VAT-registered person in
the course of his trade or business on importation of goods or local purchase of goods or
services, including lease or use of property, from a VAT-registered person. It shall also include
the transitional input tax determined in accordance with Section 111 of this Code. The term
"output tax" means the value-added tax due on the sale or lease of taxable goods or properties
or services by any person registered or required to register under Section 236 of this Code.
98
See TAX CODE, sec. 11 O(A)(3).
99
TAX CODE, sec. 110(B) provides:

SECTION 110. Tax Credits. -

(B) Excess Output or Input Tax. -If at the end of any taxable quarter the output tax exceeds the
input tax, the excess shall be paid by the VAT-registered person. If the input tax exceeds the
output tax, the excess shall be carried over to the succeeding quarter or quarters. Provided,
however, that any input tax attributable to zero-rated sales by a VAT-registered person may at his
option be refunded or credited against other internal revenue taxes, subject to the provisions of
Section 112.
100
TAX CODE, sec. 110(B).
101
CBK Power Company Ltd., v. Commissioner of Internal Revenue, 750 Phil. 748, 762-764 (2015) [Per J.
Perlas-Bernabe, First Division].
102
Commissioner of Internal Revenue v. San Roque Power Corp., 703 Phil. 310, 368-369 (2013) [Per J.
Carpio, En Banc].
103
Id. at 365.
104
TAX CODE, sec. llO(B).

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105
TAX CODE, sec. l 12(A).
106
703 Phil. 310 (2013) [Per J. Carpio, En Banc].
107
Id. at 365-366.
108
Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc., 646 Phil. 710, 732 (2010) [Per
J. Del Castillo, First Division].
109
Id.
110
Id.
111
Id. at 730-732.
112
Id. at 732.
113
Commissioner of Internal Revenue v. San Roque Power Corp., 703 Phil. 310, 357-358 (2013) [Per J.
Carpio, En Banc].
114
Id. at 358.
115
Id.
116
586 Phil. 712 (2008) [Per J. Velasco, Jr., Second Division].
117
646 Phil. 710 (2010) [Per J. Del Castillo, First Division].
118
Id. at 731.
119
703 Phil. 310 (2013) [Per J. Carpio, En Banc].
120
Id. at 371.
121
Rollo (G.R. No. 197526), pp. 67--68.
122
Id. at 68.
123
703 Phil. 310, 372-377 (2013) [Per J. Carpio, En Banc]. See CBK Power Co., Ltd. v. Commissioner of
Internal Revenue, 744 Phil. 559 (2014) [Per J. Leonen, En Banc].
124
Id. at 376.
125
Id. at 373.
126
Id. at 376. See Separate Opinion of J. Leonen in Commissioner of Internal Revenue v. San Roque Power
Corp., 703 Phil. 310, 372-377 (2013) [Per J. Carpio, En Banc].
127
Id. at 374.
128
Id. at 371-377.
129
RULES OF COURT, Rule 45, sec. 1 provides:

Section 1. Filing of Petition with Supreme Court. - A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional
Trial Court or other courts whenever authorized by law, may file with the Supreme Court a
verified petition for review on certiorari. The petition shall raise only questions of law which must
be distinctly set forth.
130
Don Orestes Romualdez Electric Cooperative, Inc. v. National Labor Relations Commission, 377 Phil. 268,
274 (1999) [Per J. Pardo, First Division], citing Caruncho III v. Commission on Elections, 374 Phil. 308 (1999)
[Per J. Ynares-Santiago, En Banc].

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